Judge's ruling quells Manor revolt

Friday

Aug 24, 2012 at 12:01 AMAug 24, 2012 at 9:40 AM

AJackson County Circuit judge has denied the Rogue Valley Manor board's request for a temporary restraining order that the board said was necessary for it to continue its efforts to separate from Pacific Retirement Services.

By Bob Hunter

AJackson County Circuit judge has denied the Rogue Valley Manor board's request for a temporary restraining order that the board said was necessary for it to continue its efforts to separate from Pacific Retirement Services.

A lawyer for the board said he expects the board members involved in the action against PRS to be terminated from their positions in a PRS board meeting scheduled for today.

"PRS will now fire the Manor board, or at least the seven members of the board who authorized the lawsuit," said Thomas McDermott, a Portland attorney representing the Manor board.

The board members of the Medford retirement facility sought the restraining order to forestall what they said would be the imminent removal of dissenting Manor board members by the PRS board and the firing of the Manor's executive director, Kevin McLoughlin. They said if that occurred, any effort to separate from PRS would be stopped in its tracks.

Judge Philip Arnold ruled against the Manor board's request Thursday, saying the Manor's own bylaws establish PRS as having full authority to remove Manor board members and that there was no basis for the court to step in to protect McLoughlin's job.

The Manor board had taken the action as a precursor to its efforts to be separated from PRS control. The two boards of the Manor and PRS have been locked in a dispute for months over control of the Manor, which has more than 960 residents. The Manor board created PRS in 1991 to provide management services, but in doing so essentially created its own parent organization. Now the board wants to reclaim autonomy over the Manor's operations.

PRS operates 10 major retirement communities in five states, along with a variety of other housing facilities and miscellaneous operations, including two golf courses and a hotel in Medford. Manor residents and board members have said in taking on the array of other projects, PRS strayed from the mission established in 1955 with the founding of the Manor.

But Arnold quoted the Manor's own articles of incorporation and bylaws in denying the request for the temporary restraining order, noting that the wording specifically gives PRS the authority to remove any member of the Manor board.

"The language ... is plain and the meaning is clear," Arnold wrote.

Arnold said approving the temporary restraining order "would require the court to re-write the parties' governing documents and create a right for the Manor that does not exist."

Brian McLemore, chief executive officer of PRS, said in an email sent Thursday that PRS would work with residents to repair the rift.

"This has been a difficult experience for both organizations," McLemore wrote. "We realize there is work that needs to begin immediately, with Manor Resident Leadership as we move forward with rebuilding our relationship. The PRS Board will be meeting tomorrow (Friday) to address the issue before them."

In response to questions emailed to him, McLemore wrote, "We will have further comments tomorrow (Friday) once the PRS Board has a chance to meet."

McDermott, the Manor board's lawyer, said the board uprising is expected to be quelled for good in today's PRS meeting, which is scheduled for 6 p.m. at the PRS headquarters in Medford.

"We expect a new board to be appointed by PRS that will be loyal to PRS and will vote to dismiss the lawsuit," McDermott said.

Manor board members and residents say they are being charged exorbitant fees by PRS and would like to have more control over the facility's operations. McDermott has previously said that the $3,500 per unit management fee charged by PRS is about $2,000 more than is typically charged for such services. He said Thursday those fees bring in "at least $1 million more (than cost) every year so they (PRS) can go support other projects."

Manor board members say that when PRS was established it was agreed that management fees would be charged to the Manor "at cost" — in other words, with no profit attached.

McDermott said the expected removal of the current board members means the Manor board will have no real authority and that the power for all major decisions will lie solely with the PRS board.

"The Rogue Valley Manor board now will be no different than some of the residents' committees," he said. "PRS will give them lip service, but if they really want to change anything, good luck."

McLoughlin, the Manor's executive director, was placed on paid leave on Aug. 10 just before the dispute became public. Manor residents and members of the board said PRS officials believe McLoughlin had provided the Manor board with confidential information on PRS discussions or plans. They also said that was not the case.

McDermott said if PRS goes through with the dismissals, it is unlikely to be the end of the debate.

"PRS can get rid of the board and get rid of the executive director, who is highly respected and beloved by the residents," he said. "But they still have to deal with the residents, who are pretty revved up ... and are not going to take this lying down."

The Rogue Valley Manor provides "life care" retirement services that include housing, meals, activities and medical services. Residents pay a large up-front fee to move into the facility, which provides housing options ranging from free-standing housing to apartments, nursing facilities and an Alzheimer's care unit.

Bob Hunter is editor of the Mail Tribune. Reach him at 541-776-4460 or bhunter@mailtribune.com.